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Paragraph on The failure of an alliance

However the degree of possible incompatibilities depends to which extend the cultures differ from each other. Hofstede (2001) mapped so-called “clusters”. Cross-border alliances consisting of countries comprised in a cluster, share many cultural similarities and are more likely to succeed than alliances involving non-cluster countries. In this case the incompatibilities due to cultural differences, as developed in Hofstede`s dimensions play an significant role and might cause the poor performance or even the failure of an alliance.

However the dilemma of poor performance or failure of international alliances due to the common source of incompatibility, culture, can be minimised. Holt and Wigginton (2002) emphasise that Hofstedei?? s research on dimensions of cultural values provides a useful model to get a better understanding of cultural diversity among different nations. Jackson (1995) argues that Hofstedei??

s study offers a framework for analysing similarities and differences in cultures of two or more countries, since alliances between different nations only turn out successfully if the different parties understand the different views each other may have on the world. Understanding Hofstedei?? s dimensions helps to explain why other cultures are different. Therefore Holt and Wigginton (2002) underline that intercultural training of partners in an alliance is an important way to facilitating and extending that understanding.

Such training is useful for preparing negotiators or managers, who have to work closely on a day-to-day basis with the venture partners, once an alliance has been formed. Successful managers or employees in cross-border alliances are those who are capable of adapting their behaviour to be effective members of the multinational organisation. An interview of 400 employees, who worked abroad or with foreign businessmen, of the company Honeywell revealed that typical cross-cultural problems are communication, misunderstanding of the rules of social engagement and different attitudes towards time.

(Dotlich, 1982 cited by Cartwright, 1996) In this context Hofstede (2001) developed a training program in intercultural competence which enables people, dealing with other cultures, to gain a conscious understanding of cultural diversity and consequently to be able to minimise incompatibilities. The training passes through three phases: The first phase is awareness, which teaches participants that one carries a particular mental software because of the way he was brought up, and that others who grew up in different environments carry a different mental software.

This awareness phase tries to convey the message to perceive people in their cultural context by revealing the learner’s own software and where it may differ from that of others. For instance, understanding that Americans will demonstrate a greater sense of individualism, relatively less concern with power distance, and greater tolerance for ambiguity often helps American managers and employees how their values correspond to those from different countries. (Holt and Wigginton, 2002)

In the second phase, the knowledge phase, participants gain new knowledge about different cultures by learning their symbols, heroes, and rituals. Although employees from one company of the alliance would never share the values of another company’s culture, they must at least get an intellectual grasp on where the values differ from one ones. Due to this fact, German companies, for example should know that gift giving is an essential symbol in Chinese business culture. Knowing about this ritual, avoids Germans to come “unprepared” to a business meeting.

(Gesteland, 2002) Finally Hofstede (2001) mentions the skills phase which is based on awareness and knowledge but adds practice and actual experience. Participants have to learn to understand the symbols of the other cultures, recognise their heroes, practise their rituals and experience the satisfaction of getting along in the new environment. This last method of training is based on field experiences which might entail a short trip to the partners location in order to experience and use the learned theory.

(web 8) Concerning the universality of the training, Hofstede (2001) says that intercultural competence can be taught, but for example students with extreme left- or rightwing political sympathies or unduly inflated egos are not likely to gain some distance from their own beliefs and might not succeed in doing this training. There are a multitude of organisations providing cross-cultural training utilising many different methods in their programs. ( web 9)

As a study shows, the two most commonly cited elements of these programs are factual information about the other country and understanding the culture of the other country, as suggested by Hofstede. (web8) It gets obvious that minimising incompatibilities in cross-border alliances, which occur mostly due to cultural differences, means understanding the differences in national cultures of the allied companies. All parties involved need first to appreciate the different views and interpretations each other may have on the world.

Without this awareness, which they can gain through training, they can not even begin to understand more specific behaviour within the context of the corporate culture Just comparing one’s own management style, decision-making progress or reward system with allied organisations, reveals that there are differences and how these differences are, but without a broader contextual understanding of national values the explanation why there are differences can never be answered. (Cartwright and Cooper, 1996)

In conclusion it can be said, that the essay shows the existence of different approaches in order to analyse the sources of incompatibility in cross-border alliances. In the traditional way of analysing them, people focused their attention on rational-economic factors. But as Kitsching (1967, cited by Cartwright and Cooper 1996) says, “[… ] the mere existence of potential synergism is no guarantee that the combined operation will realise the Potential. ” That is to say, that entering into an alliance by just looking at economic-rational factors is no guarantee for success.

Cartwright and Cooper (1996) emphasise this issue by using an illustrative comparison. They say that conceptualising an alliance exclusively as a rational financial and strategic activity is “[… ] like buying a house when one is satisfied as to price, title, location and structure, without inspecting the interior; then, having moved in, finding oneself uncomfortable with the layout and irritated by the eccentricities of the workings of the central heating system. ”

This comparison reveals that the common sources of incompatibility in a cross-border alliance is represented by different cultures of the partners within an alliance. Since culture affects the way of decision making, the management style and other parts of the organisational culture, numerous problems or “incompatibilities” might arise and harm the performance of the alliance. These arising incompatibilities can be explained and analysed by using Hofstede`s and Halli??

s framework of national culture. As a possibility to minimise this harming sources of incompatibility, the partners within an alliance have to be aware of the impact of their own culture in order to understand the cultural differences of the others. This cultural understanding can be taught by training and consequently helps to minimise the incompatibilities, on the one hand, and maximises the synergy effect of the alliance, which is the key of a winning cross-border alliance, on the other hand.